Many US families are underwater with debts: study

As the country emerges from the Great Recession, a substantial number of U.S. families are underwaterand not just with their mortgages.

According to a new University of Michigan report, about one out of every five U.S. households owe more on credit cards, medical bills, student loans and other noncollateralized debts than they have in savings and other liquid assets.

The report also predicts continuing trouble ahead for home mortgages, with 1.7 percent of families surveyed in 2011 saying that it is "very or somewhat likely" that they will fall behind on their mortgage payments in the near future. This represents an improvement from 2009, however, when 1.9 percent of families had such expectations.

"Our data suggest that the mortgage crisis will continue for the next few years, although a somewhat smaller share of families will experience mortgage distress," said Frank Stafford, an economist at the U-M Institute for Social Research (ISR) and co-author of the report with U-M researchers Bing Chen and Robert Schoeni.

"And even though average savings levels have gone up since 2008, our data show that there has been no improvement in financial liquidity between 2009 and 2011, except among families with more than $50,000 in savings and other liquid assets."

The report is based on an analysis of home ownership, mortgage and other debt, and financial resources among the same 8,121 families interviewed before and after the economic downturn. The families were interviewed as part of the ISR Panel Study of Income Dynamics, the longest running longitudinal household survey in the world.

Among the key findings:

About 3.5 percent of families owned a home and were behind on their mortgage payments in either 2009 or 2011, or in both years. While these percentages are low, the number of families affected is significantapproximately 4.1 million on a national level.

The proportion of families with no savings or other liquid assets rose to 23.4 percent in 2011, up from 18.5 percent in 2009.

About the same percentage of families in 2009 and 2011 had $30,000 or more in credit card and other noncollateralized debts (8.5 percent vs.10 percent), and about the same proportion (48.0 percent vs. 47.4 percent) had no such debt in both years.

"Some families have not been able to make substantial headway," Stafford said. "Even if they're not underwater with their mortgages, they are struggling to save money and reduce their debts."

Stafford says the situation today follows a scenario described by the 1920s economist, Irving Fisher.

"In Fisher's 'Debt Deflation Theory of Great Depressions,' he predicted that when people are optimistic about a broad investment category, as they were before the Great Depression and now in the housing bubble of the Great Recession, there is a companion rise of excessive indebtedness," he said. "Once the bubble in the underlying asset has burst there is a rush to safe assets, as in 2009-2010. In short, as the inevitable collapse happens, they rush to get rid of their debt and start saving more.

"It's a classic response to economic uncertainty. But the problem is that today only those families who have more than $50,000 in liquid assets have actually been able to do this to any extent. The rest of American families are simply treading water, if they're lucky."

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81 comments

According to a new University of Michigan report, about one out of every five U.S. households owe more on credit cards, medical bills, student loans and other noncollateralized debts than they have in savings and other liquid assets.

Duh.

School debts now cost 1 to 3 years worth of your entire life income to pay off, and often don't even result in a higher paying job.

Ironically, some of the best paying jobs that require a college degree actually are the easiest ones to pass, such as journalism and nursing, particularly by the time you consider they only work 36 hours per week.

Don't be a fool. Stay OUT OF SCHOOL, at least don't go into STEM, because it's harder, costs more, and it doesn't pay as much unless you're in a management level position.

Starting your adult life off with 100k to 200k in school debts is a recipe for failure.

I'm in the half that doesn't use credit for instant gratification. The cards are just for ease of payment. Letting debt, other than a mortgage or a car loan, exceed 25% of your monthly income is a stupid move. I've always paid off the balance, even when I was only making $6500 a year.

Borrowing to go to college only makes sense if the degree has earning potential. Yeah, there are times when even a good degree doesn't guaranty a job, but they pass.

One problem is almost nobody, including the fools in government itself, really understands what a "Trillion" dollars is.

This country's debt is so big it's ridiculous.

I figure another ten years of this, give or take, and our government will collapse, because that's about when the interest on the debt will become impossible to keep up with, and probably the single largest item on the budget.

IF there were a million millionaires and they all paid 100% tax rate, that would be a trillion dollars of revenue to the government, which isn't even enough to cancel the deficit.

If we wanted to actually pay off the debt, we'd need nearly 15 million millionaires to pay 100% taxes.

Massive debts are the bankers way of controlling economies and the population. Its their answer to this over overpopulated consumptious shit economies.

We need to do something about india and pakistan etc. Those shit holes are overpopulating and polluting the planet(one of the biggest in the world). At least china is working to become green and they have rules to curb population growth.

Apple has left 60 billion dollars offshore because US corporate taxes are the highest in the world. Poor people, hammered by incompetent Obama and super high energy costs and taxes, do not have the option of emulating Al Gore - Apple Board Member.

What bank is allowed by any govt to print money?What is a 'Federalees'? Mexican national police?

The "Mexican" national police is a foreign institution.Mexico has been secretly a federal state for quite a while now.(This is why Mexicans call them federales, i know you have googled/wikipedia the word federales)

Mexican people have been raped by the inquisition and now the USA.And then you wonder why there are so many Mexican gangs. They are poor because of foreigner rape, ofcourse they want to fuck you up.I cheer for them every time they hang a banker.

What bank is allowed by any govt to print money?What is a 'Federalees'? Mexican national police?

The "Mexican" national police is a foreign institution.Mexico has been secretly a federal state for quite a while now.(This is why Mexicans call them federales, i know you have googled/wikipedia the word federales)

Mexican people have been raped by the inquisition and now the USA.And then you wonder why there are so many Mexican gangs. They are poor because of foreigner rape, ofcourse they want to fuck you up.I cheer for them every time they hang a banker.

'Progressives' do love violence.But the govt of Mexico still controls their money.

And fascists love to see millions if not billions people starve to death, who is the violent one here?

Also govt manages the money, it does not control it any way, that is the banks job.

Fascists are socialist.Govt creates the money, inflates is value, sets rules and regulations controlling the economy and subsidizes industries and groups it favors and taxes those it does not favor.Banks are instruments of the state which is why the Federal Reserve has a .gov web-site and its chairman is appointed by the president.

No they arent, fascism is a whole different scale than "capitalism vs socialism".

Aldrich's bill met much opposition from politicians. Critics charged Aldrich of being biased due to his close ties to wealthy bankers such as J. P. Morgan and John D. Rockefeller, Jr., Aldrich's son-in-law. Most Republicans favored the Aldrich Plan,[36] but it lacked enough support in Congress to pass because rural and western states viewed it as favoring the "eastern establishment".[2] In contrast, progressive Democrats favored a reserve system owned and operated by the government; they believed that public ownership of the central bank would end Wall Street's control of the American currency supply.[36] Conservative Democrats fought for a privately owned, yet decentralized, reserve system, which would still be free of Wall Street's control.[36]

The somewhat silly is, the physicists know about solution of energetic and economical crisis for twenty years - but they're ignoring it as a single man for no to threat their existing jobs and salaries. Prof. Hagelstain at MIT generates excess energy in the form of heat is produced which is over 14 times the input energy - for five months of uninterrupted run already. I just hope, we succeed with implementation of cold fusion before the USA will end with global nuclear war with Iran or China. Every of you should urge the local politicians to invest into cold fusion research by now. It's the only way, which can save the life environment, too.

How exactly has "communism" killed 100m people and starved people to death?

S"Joseph Stalin, leader of the Soviet Union, set in motion events designed to cause a famine in the Ukraine to destroy the people there seeking independence from his rule. As a result, an estimated 7,000,000 persons perished in this farming area, known as the breadbasket of Europe, with the people deprived of the food they had grown with their own hands."

"The most absolute Power, that is the communist U.S.S.R., China and preceding Mao guerrillas, Khmer Rouge Cambodia, Vietnam, and Yugoslavia, as well fascist Nazi Germany, account for near 128,000,000 of them, or 84 percent. "http://www.hawaii...HAP1.HTM"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience." - -- C.S. Lewis http://www.quoted...tes/2069

Does this make America half as evil for murdering 3 million civilians in Vietnam?

While I agree the Democratic Party was run by mass murdering left wing douchebags when they started the war in Vietnam ... Communists in Cambodia were much better mass murderers.

All with the blessings of Ted Kennedy, whose brother launched US involvement.How many tens of thousands of Vietnamese escaped after Congress cut off funding?

American involvement started with President Eisenhower. The war phase didn't start till 1964, after JFK was killed. There is suspicion that JFK was killed because he didn't want to be involved in Vietnam. Also note that until Reagan, there was such a thing as a conservative democrat. After Reagan they converted to the Republican party. They were mostly in the south ( I would hazard a guess that it had to do with the civil war and the carpetbaggers while a series of Republican presidents held the white house).

Massive debts are the bankers way of controlling economies and the population.

Governments control the bankers as they print the money.

As always, ryggsuckin' mouths the big lie.

Wake up, moron --the Federal Reserve(the ones printing all that inflationary money, secretly bailing out the brother banks, and giving them profit out the yingyang by loaning operating capital at ZERO PERCENT)-- is PRIVATELY HELD.

Why must the US President approve the Chairman and why does the Federal Reserve have a .gov website address?

"The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution. "http://www.federa...4986.htm

A socialist economic system would consist of an organisation of production to directly satisfy economic demands and human needs, so that goods and services would be produced directly for use instead of for private profit driven by the accumulation of capital, and accounting would be based on physical quantities, a common physical magnitude, or a direct measure of labour-time.[5][6] Distribution of output would be based on the principle of individual contribution.

In a capitalistic case a privately owned business would collect all capital/goods from many people.When people are allowed to grow their own foods and sell it that means equal distribution of food.

Cuba is becoming more social not capitalist.

in any case everyone in Cuba was secured with food. However in capitalist US more than 15% are insecure about having food on there tables. Disgusting USA.

Market socialism consists of publicly owned or cooperatively owned enterprises operating in a market economy. It is a system that utilises the market and monetary prices for the allocation and accounting of the means of production, thereby retaining the process of capital accumulation. The profit generated would be used to directly remunerate employees or finance public institutions.[36] In state-oriented forms of market socialism, in which state enterprises attempt to maximise profit, the profits can be used to fund government programs and services through a social dividend, eliminating or greatly diminishing the need for various forms of taxation that exist in capitalist systems.

You might love socialism if you opened your freaking head from capitalist indoctrination.

When people are allowed to grow their own foods and sell it that means equal distribution of food.

Russia used to have collective farms. Traditionally centrally planned they were usually failures. When individuals were allowed to have their own plots, they worked hardest on their own plots -- because they benefited from their own hard work.

These exist all over the country and world. Some are publicly held companies like GE and some are co-ops.The key difference is they are NOT owned by the govt since the govt has the force to prevent competition.Example of these are Freddie and Fannie and now General Motors. Also, via onerous regulations, the govt effectively owns companies and limits competition. This is what the meat packers did when they sponsored the creation of FDA. The intent was to shut down their competitors.

Capitalism does not equal individualism.It simply cant, because you cant accumulate capital without screwing over other people. So this means that you get many people working for one person.

Individualism is socialism.

Of course you can accumulate capital. One way is call an IPO. Companies sell stock and you are free to buy it, or not. No one is forced to buy the stock.Venture capitalist have their own sources of capital and they decide if and when to invest. No one is forced.Govts and businesses raise capital with bonds. No is force to buy them.Only govts have the power to screw people over by printing money and plundering their wealth.

Capitalism enables individuals to persuade other individuals to invest capital in their business ventures.Very individualistic.

"Europe is about to learn there is no Santa Claus.

The China Investment Corp., that nation's sovereign wealth fund, has stopped buying European government debt, concerned about the region's financial turmoil. ""But Europe is about to learn what Great Britain's Margaret Thatcher once wisely observed about those living at the expense of others. At some point, others run out of money to contribute."http://www.ocregi...ece.htmlThis is what happens when the govt destroys capital.

RyggTard would rather not have people know that his reference is from "Orange County" a U.S. county Nestorius for bankrupting itself in 1994 through the Republican/Libertarian plan to use of county money to purchase "rare coins and postage stamps" that they hoped would appreciate in value.

That Republican plan failed of course. Just like all other Republican plans.

"But Europe is about to learn what Great Britain's Margaret Thatcher once wisely observed about those living at the expense of others. At some point, others run out of money to contribute." - RyggTard

Orange County was at the time the largest US county to have gone bankrupt, when in 1994 longtime treasurer Robert Citron's investment strategies left the county with inadequate capital to allow for any raise in interest rates for its trading positions. When the conservative residents of Orange County voted down a proposal to raise taxes in order to balance the budget, bankruptcy followed soon after. Citron later pleaded guilty to six felonies regarding the matter.

Republican Orange County voted itself into bankruptcy. Just as Republicans in America have done to the entire country.

Ahahahaha... So in the Libertraian view of the universe, Da Gubderment owns the meat packing industry because it imposes health and safety standards on that industry.

Libertarians are morons.

"Also, via onerous regulations, the govt effectively owns companies and limits competition. This is what the meat packers did when they sponsored the creation of FDA. The intent was to shut down their competitors." - RyggTard

Orange County was at the time the largest US county to have gone bankrupt, when in 1994 longtime treasurer Robert Citron's investment strategies left the county with inadequate capital to allow for any raise in interest rates for its trading positions.

"Robert Lafee Citron (born 1925) is a Democratic Party politician who was the longtime Treasurer-Tax Collector of Orange County, California, when it declared Chapter 9 bankruptcy on December 6, 1994. Citron was the only Democrat to hold office in otherwise Conservative/Republican Orange County at the time. "

"Many academics I know agree that black-studies programs are often slipshod, academically non-rigorous, and repositories for grievance politics. But they wont say so publicly, for fear of being branded as racists."http://www.nation...hn-fund#

Robert Lafee Citron won re-election seven in that Republican County times; in his last election victory, his opponent, John Moorlach, charged that his handsome gains were the result of risky betting.

Citron was a product of the Republican County who repeatedly elected him - a Republican County that would rather bankrupt itself than raise taxes. Just as Nationally Republicans have bankrupted their nation by their borrow and spend tax policies.

"Robert Lafee Citron (born 1925) is a Democratic Party politician who was the longtime Treasurer-Tax Collector of Orange County, California, when it declared Chapter 9 bankruptcy on December 6, 1994. Citron was the only Democrat to hold office in otherwise Conservative/Republican Orange County at the time. "

You're like nest full of chickens, who feel squashed with their neighbours mutually. "It's because of YOU", says the white chicken to the black chicken. "Nope, it's because of YOU", insists the black chicken. "Nope, it's because you're both way too libertarian chicks", says the third one - and so on... Whereas the primary reason is, the hen is sitting on the nest.

Accordingly, the primary reason of the financial crisis is the energetic crisis, because of steadily increasing prices of oil. These prices are escalated with wars, which do consume huge amount of oil by itself. The lost Vietnam war initiated the oil crisis at the beginning of 70's, the Iraq war initiated the oil crisis at the end of 2009. Because one third of oil is consumed in agriculture, the price of oil escalates the price of food and so on. The only solution is therefore to decrease the price of energy. It cannot be done with technologies, which are increasing the price of raw materials - this just delays the solution.

Robert Lafee Citron won re-election seven times in that Republican County; in his last election victory, his opponent, John Moorlach, charged that his handsome gains were the result of risky betting.

Citron was a product of the Republican County who repeatedly elected him - a Republican County that would rather bankrupt itself than raise taxes. Just as Nationally Republicans have bankrupted their nation by their borrow and spend tax policies.

Just 2 years ago the Republican Mantra was "Drill baby Drill", with the Republicans roundly criticizing their own president for a short moratorium on drilling in the gulf in order to review and modify safety protocols in the wake of the massive oils spill there.

Republicans claimed that drilling for new oil was essential to lower the price of oil for Americans.

Now just 2 years later, Without an increase in oil production, America is now a net exporter of oil. and has had several refineries close due to lack of international demand.

Republican oil policy looks even more like idiocy than it did at the time.

U.S. gasoline imports have been dropping and exports rising since 2005.

How exactly has "communism" killed 100m people and starved people to death?

Here is how:

"Scholars Continue to Reveal Mao's Monstrosities : Asia: Exiled Chinese historians emerge with evidence of cannibalism and up to 80 million deaths under the Communist leader's regime.""It is now believed that as many as 60 million to 80 million people may have died because of Mao's policies--making him responsible for more deaths than Adolf Hitler and Josef Stalin combined."""The biggest problem for the Communist Party is they never learned how to treat human beings like human beings.""http://articles.l...st-party